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The Dairyman JANUARY 2010 5
NEWS
Kelvin Wickham, managing director
Fonterra Global Trade
Keith Woodford, Professor of Farm Management
and Agribusiness, Lincoln University
Lachlan McKenzie,
Federated Farmers dairy spokesman
"At the moment the markets are being driven
by tight supply rather than robust growth in
consumer demand. In New Zealand we have
some concerns going into 2010 about the
weather conditions, with an El Nino pattern
forming.
"With prices well above their lows last year
it remains to be seen whether Northern
Hemisphere producers will increase production
when their season starts up.
"China demand is strong, South East Asia is
buoyant and the Middle East markets are tick-
ing over. Demand requirements overall are far
better than one year ago.
"Our concerns are that high commodity
prices will at some point be passed through to
the retail market, dampening demand, and that
the global economic recovery is still fragile."
"The season is now suffi-
ciently advanced that dairy pay-
out estimates for 2009/10
should be reliable within plus
or minus 40c of company pre-
dictions. No-one has any real
idea what 2010/11 will bring,
and any estimates prior to next
October will involve lots of
guessing.
"A mid-season lamb price for
this current season of about $70
seems likely, but exchange rate
changes are much more quickly reflect-
ed in lamb prices than milk prices, so it
could still go considerably either way.
The 2010/11 season is too distant to be
making predictions, but lamb
prices like we saw in 2008/9 are
only possible if the euro and
sterling exchange rates drop.
"Oil and electricity are likely
to rise. In future we will think of
current oil prices as being cheap.
Fertiliser is more likely to go up
than down."
"The price of good quality
dairy farms may stabilise but
poorer quality dairy farms will
remain hard to sell. Bank lending
policy will be crucial in determining the
price of dairy farms. The price of hill
country sheep farms has further to
drop."
"Federated Farmers will be working even hard-
er for our members to be allowed to continue to
farm. We now have a cascade of regional councils
wanting to make work for themselves by control-
ling farmers with consents and licenses.
"Exporters will continue to be under pressure
due to a high exchange rate that is kept artificially
high partly due to poor government expenditure.
"House prices look set for another upswing
before the next crash fueled by poor fiscal policy
of government.
"The dairy sector
looks set to have another
good year with world
prices holding at very
good levels but the
exchange rate will damp-
en much of the gains.
"There will be a new
group of bright enthusi-
astic people winning
awards in New Zealand
Dairy Industry Awards.
This bodes well for the
dairy industry with new
innovative people making
opportunities, as have pre-
vious generations.
"I hope others in our great country can see the
huge advantages we have as a nation with plenty
of water, a great environment and an educated
highly skilled farming community that provides
high quality food and fibre that sustains our high
living standards.
"Let's work together in solving our small issues
to allow this great country of ours to prosper."
Looking ahead
Industry leaders predict better times for dairying in 2010
Kelvin Wicklam
Lachlan McKenzie
Dr Keith
Woodford
Moreonpage6
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